The Founder’s Dilemma
As anyone who is in touch with the world around them knows, the medical aesthetics and wellness industries are growing by leaps and bounds. Those who have been looking from the outside with shallow interest are now intrigued by what’s going on inside. Social awareness and acceptance have led to exponential industry growth and the realization by onlookers of uncapped potential.
As such, many early and established entrants in the industry find themselves being courted by prospective investors who are looking to become a pedal on the budding flower in the industry before it becomes the watermelon that it is destined to become.
Health and wellness, internal and external, are without question on the forefront of most people’s minds. With advances in health and wellness technology, an improved understanding of the mind-body connection, better educational resources (including social media), and easy access to treatments that were once reserved for the wealthiest in society, the aesthetics and wellness industries are experiencing rapid growth.
Couple those factors with a desire to live longer and healthier lives, stay active into our senior years, and retain a youthful appearance, you have the perfect storm for an industry to grow for many years to come. Compounding this growth is the fact that a very low percentage of people have engaged in the services offered by medical spas.
We define a “medical spa” as a medically based practice that engages in services that require treatment by a medical professional under the supervision of a physician and are of the medical aesthetic and wellness variety. Services may include injectable neurotoxins, dermal fillers, and biostimulators; regenerative medicine (i.e., exosomes, platelet-rich plasma/fibroblast, stem cells...); skin rejuvenation/resurfacing; sexual wellness; wellness (i.e., hormone replacement therapy, IV therapy, weight loss...); medical grade skincare; medical grade facials; etc.
So, you ask, what’s the dilemma for the founder? The dilemma is this, when is the right time to take on a partner or exit completely, and who is the right partner to do either? Those unfamiliar with all it takes to build and grow a business may not understand the dilemma. It may look as easy as selling when you’re ready and trying to get as much cash as you can. It can also seem as simple as taking on a partner that can inject cash that will help you get to the next level.
However, such a decision is not that easy for a founder who has taken on great risk and poured their heart and soul into nurturing and growing a business that was at one time on outer edges of what now appears to be a no brainer industries. Such a decision will either lead to a complete exit, which may bring with it loss of identity concerns, or giving up control over something the founder has had complete control over since its inception.
For a founder, choosing the correct partner is a far more difficult and complex decision than merely accepting a payout. Most founders are interested in seeing the practice or brand they created grow into something they’ve envisioned for quite some time. Maybe they’ve come to the realization that they’ve taken the business as far as they can, and they need an injection of fresh blood (pun intended) to see the complete vision through to reality. Maybe they’re ready to take on a less involved role, but still want to be sure their team is cared for in the same or similar manner as they have.
No matter the reason, the partner choice is an important one. One does not have to look far to find a “horror” story of a founder who took on a partner only to later regret the decision. By that time, it is too late. The marriage has been consecrated and getting out will be an expensive endeavor and likely emotionally taxing.
If you or someone you know is looking to take on an investment partner for a medical aesthetics practice or exit completely, there are a few things to consider, understand, and confirm prior to signing on the dotted line.
Why are you looking to take on an investment partner or exit? Is it to achieve that exit payday at the height of interest in the industry? Is it to bring on someone who can help you take your practice to the next level? Is it to find someone to partner with so you can get your personal life back? There is no right or wrong answer for your why. However, understanding your why will be crucial for understanding if a particular investment partner is the right fit for you.
What is your vision for the investment partner relationship? Is it that you want them to be a silent partner and simply there to inject cash to help you achieve your vision? Is it to buy you out completely so you can exit in 30, 60, or 90 days? Is it to have them buy you out partially while you retain equity and control so you can continue to grow the practice and get a “second bite at the apple” once the brand has achieved significantly greater growth? Is it to offer resources beyond financial to support the realization of your vision? Again, there is no right or wrong answer, but knowing the answer is important.
What kind of investment partner do you want? Do you want a partner who is familiar with the industry and has experience operating med spas? Do you want someone who understands acquisitions and mergers so you can achieve the greatest multiple at that next exit? Do you simply want the highest bidder and do not care what happens after you are gone? Do you want someone who will take care of your team in much the same way you’ve done from the beginning? Again, no right or wrong answer and your answer may include a little of each of these responses and more.
What does your due diligence reveal about the investment partner? What does their website say about them? What does the evidence suggest? Do they invest for the long-term and with relationships in mind or are they looking to acquire and move on to the next deal and next fundraise?
Below are some questions to ask yourself about the prospective partner once you’ve had a chance to get to know them a little better.
Do their values align with yours?
Does the potential investment partner support and/or share your long-term vision for your practice?
Does the investment partner’s culture align with the culture of your business?
Do you think you will enjoy working collaboratively with the investment partner? Do you like them?
The decision to sell or take on an investment partner is never an easy one. It is even more difficult for a founder who has given all they have to make a practice a success. Most founders believe that no one will ever be as passionate for the practice as they are. However, and contrary to popular belief, there are investment partners out there that are passionate for medical aesthetics and are driven by more than financial returns. They certainly have a fiscal responsibility to their shareholders, but they know that it takes more than a drive to make money to be successful.
There is nothing that can replace a purpose driven practice. In medical aesthetics it’s about helping people feel alive and well on the inside and look as great on the outside as they feel on the inside. Done right, financial gains will be the byproduct of fulfilling that purpose.
Want to learn more about B.A.R. Aesthetics? Send an email to info@baraesthetics.com.
💌 Are you ready to take on an investment partner to help you grow your medical aesthetics practice? If so, we are here to partner with you every step of the way. Fill out the contact form or send us an email at info@baraesthetics.com and we will schedule a call to discuss the possibilities.
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